asian journal of agriculture and rural development2)2019-ajard-216-230.pdf · 6.09 kg/annum in 2015...
TRANSCRIPT
216
MACROECONOMIC VARIABLES AFFECTING FISH PRODUCTION IN
NIGERIA
Edet Joshua Udoh a,
Sunday Brownson
Akpan b
a Department of Agricultural Economics and Extension, University of
Uyo, Akwa Ibom State, Nigeria b Department of Agricultural Economics and Extension, Akwa Ibom
State University, Nigeria
[email protected]; [email protected]
(Corresponding author)
ARTICLE HISTORY:
Received: 25-Mar-2019
Accepted: 13-Sep-2019
Online Available: 08-Oct-
2019
Keywords: Artisanal fish,
Aquaculture,
Macroeconomics,
production,
Nigeria
ABSTRACT
The study is an attempt to examine the influence of macroeconomic
variables on the growth of fishery sub-sector in Nigeria. The study
covers the period from 1961 and 2017. The results apparently
revealed that aquaculture production, artisanal fish production, and
total fish production, grew exponentially at the rate of 8.90%,
3.75%, and 4.25% respectively. To be more precise, various other
factors like, demand shocks, food imports, and variable exchange
rate, affected artisanal fish production in the long-run; while
exchange rate and demand shocks were significant in the short-run
period. For the aquaculture production, demand shocks, credit
potential, inflation, food imports, and exchange rate were some
significant policy variables in the long-run; whereas demand shocks
and exchange rate were also significant in the short-run period.
Finally, as far as the total fish production is concerned, demand
shocks, food imports, and exchange rate were significantly trending
variables, both in the short and long-run periods. To promote fish
production in Nigeria, fish imports should be gradually restricted
and the economic system regulated to ensure the stability of naira
exchange for the US dollar.
Contribution/ Originality
The study was designed to explore and uncover some key macroeconomic variables and important
fundamentals that affect fishery sub-sector in Nigeria, which led us to quite interesting findings which
revealed that some macroeconomic variables are critical in achieving adequate prospective and fullest
potentials in fishery sub-sector in the country.
DOI: 10.18488/journal.1005/2019.9.2/1005.2.216.230
ISSN (P): 2304-1455/ISSN (E):2224-4433
How to cite: Edet Joshua Udoh and Sunday Brownson Akpan (2019). Macroeconomic variables
affecting fish production in Nigeria. Asian Journal of Agriculture and Rural Development, 9(2),
216-230.
© 2019 Asian Economic and Social Society. All rights reserved.
Asian Journal of Agriculture and Rural Development Volume 9, Issue 2 (2019): 216-230
http://www.aessweb.com/journals/5005
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
217
1. INTRODUCTION
Keeping in view the established fact that macroeconomic imperatives undoubtedly, have very
effective influence on the directions and magnitude of growth in the agricultural sector. As
Muftaudeen and Abdullahi (2014) concluded that an effective macroeconomic policy framework is
very much necessary in regulating the economic activities in order to guarantee a well-established
and sustained economic growth in developing economies. This assertion is obviously premised on
the tenant of Keynesian Theory, which tends to state that public policy has a direct impact on
aggregate demand, which would have multiplier effects on the growth of real economic sectors, in
the short-run aspect.
Considered as a major agricultural sector in the agrarian economy of the coastal States in Nigeria,
‘fishery’ is unarguably the most important and critical sub-sector, with respect to income
generation, poverty reduction, and dietary requirement. Payne (2000) and Food and Agricultural
Organization (2018) noted that fish production helped to strengthen food security and livelihood
structure among dwellers of river-line communities. Again, on the assertion of Adekoya and Miller
(2004), it is interesting to note that fishery sources provided more than 60% of the total protein
intake among adults in Nigeria, especially in the rural areas. Strangely enough, the country is still
unable to adequately cater for its requirement of fishery products for the majority of its citizens, in
terms of both ample productive capacity and satisfying dietary needs. For instance, the per caput
average annual domestic production of fish (i.e. aquaculture output and artisans output) stood at
6.09 kg/annum in 2015 and at 5.67 kg/annum in 2016 in Nigeria. Assuming that if all that is
produced is consumed fully, then these figures are obviously, far below the recommended daily
protein intake of 0.75 g per kg of lean body weight, as asserted by FAO/WHO (World Health
Organization).
This gives much credence for a reliance on imports and inclination towards smuggling for quite an
enough proportion of domestic consumption. For instance, Federal Department of Fisheries (2018)
reported that the country’s national demand in 2012 was 2,000,000 tones, while supply stood at
690,000 tones, showing a resulting deficit of 1,310,000 tones. In 2014, a total of 2,175,000 tons of
fish was demanded for the country’s national consumption, the supply apex stood at 730,000 tones,
leaving behind a deficit of 1,404,000 tones. The total exports of fish from Nigeria was valued at
US$ 284 390 million, whereas the imports stood at about US$1.2 billion in 2013. Therefore,
Nigeria is being regarded as one of the heavy importers of fishery products in the world (FAO,
2018).
As showed in Table 1, the fishery sub-sector contributed on the average, to about 0.52% and 2.3%
of the total GDP and Agricultural GDP respectively in Nigeria, between 1981 and 2017. However,
as far as contributions for the sub-units are concerned, the artisanal fish production was about
88.82%, while aquaculture made up of the remaining 11.18% of the total fish production in the
country. This is therefore, a clear indication of high dependence on artisanal fishing for domestic
consumption, besides an in-depth indication of under-development of aquaculture sub-unit (Osawe,
2007 ).
The failure of the dismal performance of the fishery sub-sector in Nigeria has been attributed to
multifaceted factors, particularly including the debilitated agricultural policy and inadequate
policies on the national water resources (Akpan, 2012; Tobor, 1997), besides other issues relevant
to oil spillage, crude oil pollution, militant activities along the coastal States and dumping of toxic
wastes, as well as natural phenomenon like, global climatic change (Moyle, 1990; Tobor, 1997;
Enabulele, 1999; Ugwumba, 2005; Adeogun et al., 2007; Ugwumba and Nnabuife, 2008; Grema et
al., 2011; Issa et al., 2014; Adewumi, 2015; Paulina and Hammed, 2018).
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
218
Table 1: Contribution of the fishery sub-sector to the agricultural and total gross domestic product accounts for the period of 1981 and 2017
Year
% share of
fishery sub-
sector in
Total GDP
% share of
fishery sub-
sector in
Agric. GDP
% share of
Aquaculture
in total
Fishery output
% share of
Artisanal fish
in total Fishery
output
Year
% share of
fishery sub-
sector in
Total GDP
% share of
fishery sub-
sector in
Agric. GDP
% share of
Aquaculture in
total Fishery
output
% share of
Artisanal fish in
total Fishery
output
1981 0.380 3.228 2.415 97.585 2000 0.596 2.724 5.506 94.494
1982 0.435 3.346 2.432 97.568 2001 0.703 2.838 5.120 94.880
1983 0.606 4.149 2.513 97.487 2002 0.607 1.618 5.992 94.008
1984 0.509 2.859 2.470 97.530 2003 0.609 1.766 6.065 93.935
1985 0.281 1.579 3.217 96.783 2004 0.572 2.006 8.631 91.369
1986 0.380 2.154 2.009 97.991 2005 0.580 2.143 9.724 90.276
1987 0.267 1.322 2.301 97.699 2006 0.522 1.992 13.280 86.720
1988 0.364 1.581 3.803 96.197 2007 0.497 1.918 13.824 86.176
1989 0.576 2.736 8.600 91.400 2008 0.495 1.918 19.233 80.767
1990 0.642 3.009 2.323 97.677 2009 0.499 1.903 20.346 79.654
1991 0.600 2.903 5.740 94.260 2010 0.457 1.914 24.530 75.470
1992 0.518 2.562 5.367 94.633 2011 0.451 2.025 25.814 74.186
1993 0.444 1.892 6.689 93.311 2012 0.450 2.040 27.518 72.482
1994 0.436 1.724 5.344 94.656 2013 0.458 2.181 27.869 72.131
1995 0.501 1.836 4.539 95.461 2014 0.478 2.360 29.190 70.810
1996 0.604 2.134 5.452 94.548 2015 0.506 2.425 30.838 69.162
1997 0.671 2.277 5.894 94.106 2016 0.521 2.455 29.996 70.004
1998 0.729 2.495 4.231 95.769 2017 0.549 2.608 30.413 69.587
1999 0.727 2.704 4.554 95.446 Av. 0.519 2.306 11.183 88.817
Source: Computed by authors using data from CBN
Note: GDP at the current basic price
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
219
Although it is an interesting matter to ponder that fishing (including artisans and aquaculture
production) is considered as an economic activity and included as an important parts of the entire
economic system, it is ought to be affected by economic variables both at the micro and macro
levels (Akpan et al., 2012). Therefore, a need to develop a dynamic and comprehensive study
necessarily arises. It must focus on the roles of basic macroeconomic variables on fish production
in Nigeria, and should be precisely premised on the need to empirically establish this relationship.
In order to enrich the relevant literature with related information, the study should be empirically
designed to estimate a system of coefficients in both the short and long run, so as to show the
explicit relationship between fish production and key macroeconomic variables in our country of
research.
2. METHODOLOGY
An ex-post facto design had been employed in this study to establish the comprehensive
relationships between fishery output and macroeconomic variables, developed during short and
long-run periods. The data for the study had been obtained from three different sources, viz., the
Central Bank of Nigeria, Food and Agricultural Organization, and the World Bank. The data sets
acquired for 56 years (from 1961 to 2017) had been utilized therein to achieve the requisite results
accordingly.
2.1. Analytical framework and model specifications
When we precisely understand the nexus of the relationships and review the flow of agricultural
inputs and outputs within the framework of an open economy, wherein enhancers and inhibitors of
aggregate demand and aggregate supply work constantly at a brisk pace. Therefore, such an
acceleration of growth in total factor productivity or otherwise, experienced well in any real sector
of an economy is known to follow certain economic theories and various hypotheses. Within the
circles of economic parley, theorists proposed different schools of thoughts so as to conceptualize
and materialize them as a model to create causal relationships between the growth of real sectors
and some endogenous and exogenous macroeconomic variables. Essentially for this purpose,
efforts had been directed accordingly to show the relevance, direction, and magnitude of various
macroeconomic policy instruments to regulate the structural behavior of economic growth
fundamentals.
Following the neoclassical theorists and citing the works of Fischer (1993) and Lachaal (1994), as
well as the results of Muftaudeen and Abdullahi (2014), some macroeconomic variables such as;
inflation rate; real interest rate; fiscal policies, real exchange rate, besides the balance of payments,
have been identified as potential obstructing blocks to achieve the millennium goals leading
towards food security, poverty reduction, and rural development, obviously through positive and
precise growth in the agricultural sector. In more specific terms, our work is modelled on the
Keynesian IS-LM framework, which according to Fasanya et al. (2013), had originally captured
liquidity, price, and exchange rate puzzles and problems as drivers of economic growth. These
puzzles, have been well defined by both augmented Solow growth and endogenous growth theories,
stressing emphasized that investment in human capital and technological process are the major
factors, which enhance the capital accumulation. However, the endogenous growth model had been
built on economic growth, arising from the influence of significant changes in investment, capital
stock, human capacity stock, etc. (Romer, 1994).
In this study, the model specified considers macroeconomic variables that have an influence on
domestic production and restriction on import. The model is expressed implicitly as thus:
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
220
LnARSt = γ0 + γ1 ∑ LnEXCt
n
i=1
+ γ2 ∑ LnCREt
n
i=1
+ γ3 ∑ LnINFt
n
i=1
+ γ4 ∑ LnGDIt
n
i=1
+ γ5 ∑ LnFIMt
n
i=1
+ Ut … … … … … … … … … … . (1)
The variables are defined below:
ARSt = Annual artisanal or captured fish measured in metric tonnes
EXCt = Annual average nominal exchange rate (N/$)
CREt = Domestic credit to private sector (% of GDP)
INFt = Annual Inflation rate to proxy input prices (%)
GDIt = Per capita GDP representing purchasing power
FIMt = Annual value of import of goods and services in naira
Ln = Representing natural log
Ut = Random error term that is Ut~ IID (0, δ2U)
Note: Equation 1 was estimated for the three major variables representing the fishery sub-sector as specified
above. These major variables consist of artisanal fish output/captured fish output, aquaculture output and total
or sub-sectoral output.
In order to examine and test for the existence of stable long-run empirical relationship between the
fishery sub-sector output and macroeconomic variables in Nigeria’s economy, the Engle and
Granger two-step method of testing co-integration was applied and conducted for this purpose.
According to the Granger representation theorem, error correction models for the co-integrating
series were estimated in the simplest form. Therefore, the general form for the error correction
specification for the fishery sub-sector is shown in equation 2, as follows:
∆LnARS𝑡 = 𝜃0 + 𝜃1 ∑ ∆𝐿𝑛𝐴𝑅𝑆𝑡−1
𝑛
𝑖=1
+ 𝜃2 ∑ 𝐿𝑛𝐼𝑁𝐹𝑡
𝑛
𝑖=1
+ 𝜃3 ∑ 𝐿𝑛𝐸𝑋𝐶𝑡
𝑛
𝑖=1
+ 𝜃4 ∑ 𝐿𝐺𝐷𝐼𝑡
𝑛
𝑖=1
+ 𝜃5 ∑ 𝐿𝑛𝐶𝑅𝐸𝑡
𝑛
𝑖=1
+ 𝜃6 ∑ 𝐿𝑛𝐹𝐼𝑀𝑡
𝑛
𝑖=1
+ 𝛽7𝐸𝐶𝑀𝑡−1 + 𝑈𝑡 … … … … … … … … . (2)
Variable specified are as defined previously in equation 1, and coefficients (𝛽7) of the ECM (-
1<𝛽3< 0) captured the deviation of the fishery outputs from the long-run equilibrium in period (t-1).
Based on the result of the root unit test and the need to capture the dynamic relationship
appropriately while avoiding spurious regression, a time series multivariate Cobb Douglas model
representing the long-run relationship was specified at the level of variables.
Further, to study the nature and rate of growth in the artisans fish/captured fish, aquaculture and
entire fishery sub-sector; an exponential growth equation is fitted into the data. The exponential
equation is defined as thus:
ARSt = boebteut … … … … … … … … … … . (3)
𝑙𝑜𝑔𝑒𝐴𝑅𝑆𝑡 = 𝑙𝑜𝑔𝑒𝑏0 + 𝑏1𝑡 + 𝑈𝑡 … … … … … … … … … … . (4)
Where exponential growth rate is (r) =(𝑒𝑏1 − 1) ∗ 100 … … … … … … … … … … . (5)
The trend analysis was defined for the following variables:
ARSt = Annual artisanal/captured fish measured in metric tonnes
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
221
AQCt = Annual aquaculture fish measured in metric tonnes
TFSt = Annual total output in fishery sub-sector measured in metric tonnes
Note: Equation 4 was also specified for aquaculture and total fishery sub-sector. The exponential trend
equation was adopted because it is expected that the fishery sub-sector should be increasing exponentially
given increase in population and food demand in the country
3. RESULTS AND DISCUSSION
The descriptive characteristics of variables presented in the study are shown in Table 2. Since the
Jarque-Bera test reveals that most of the specified variables are not normally distributed, the
coefficient of variability measures the degree of significant variation in each specified variable.
3.1. Descriptive statistics of specified variables
The statistics of our estimated results showed that output of captured fish, credit and total
production in the sub-sector simply exhibited the least degree of variations. However, variations
were apparently more pronounced in imports, per capita income, aquaculture output, and nominal
exchange rate. The statistics for skewness showed that all specified variables are positively skewed,
implying that there is a right-tailed distribution. This means that the fishery sub-sector’s
productivity increases with the passage of time.
Table 2: Summary of the descriptive statistics of the variables
Variable Mean Median Min. Max. Std. dev. C.V. Skewness Jarque-
Bera
ARS 3.49e+05 2.66e+05 52837. 7.59e+05 1.96e+05 0.562 0.549 3.990
AQC 56646 10631. 2173.0 3.17e+05 96076. 1.696 1.871 42.607
TFS 4.05e+05 2.72e+05 55010. 1.07e+06 2.83e+05 0.697 1.056 10.605
GDI 87604. 2460.6 69.273 6.02e+05 1.68e+05 1.915 1.975 51.079
CRE 12.286 12.350 3.7043 38.387 6.269 0.510 1.962 113.029
INF 16.377 11.600 0.50000 72.800 15.459 0.944 1.996 65.712
FIM 2.05e+012 1.84e+010 4.76e+008 1.37e+013 3.70e+012 1.804 1.761 36.243
EXC 53.896 7.3647 0.54678 305.79 75.547 1.402 1.301 18.164
Obs. 57 57 57 57 57 57 57 57
Note: ARS = Artisanal fish output; AQC = aquaculture fish output; TFS = Total fish output; EXC = nominal
exchange rate; INF = inflation rate; CRE = credit to private sector; GDI = GDP per capita; FIM = food import;
Units are as defined in equations 2 and 4
3.2. Exponential trend analysis of outputs of captured fish, aquaculture and the entire fishery
sub-sector in Nigeria
Estimates of the exponential trend equation for each of the major areas of the fishery sub-sector are
presented in Table 3. The result reveals a positive relationship between the trend in output of
captured fish, aquaculture and the entire fishery sub-sector and time in Nigeria.
Table 3: Exponential growth rates in outputs of capture fish, aquaculture and total fishery
output in Nigeria
Variable Capture fish Aquaculture Entire Fishery
Constant 11.489 (181.5)*** 7.107 (57.24)*** 11.435 (185.7)***
Time 0.0375 (19.74)*** 0.0890 (23.91)*** 0.0425 (23.0)***
Exp. Growth (%) 3.75 8.90 4.25
F (1, 55). 389.59*** 571.756*** 528.83***
Note: *, ** and *** represents 10%, 5%, and 1% level of significance respectively. t-values are in parentheses
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
222
The average exponential growth rates obtained for the captured fish, aquaculture production, and
the entire sub-sector production showed the percentage figures of 3.75%, 8.90%, and 4.25%,
respectively. The findings further revealed that the turnout of fishery sub-sector in Nigeria had
shown considerable and consistent improvement during the past few years. This trend obviously
means that output of captured or artisans fishing and aquaculture production has shown the rise, on
annual basis. The growth rate has been particularly impressive in aquaculture output as compared to
artisans fishing. Many significant factors could be attributed for the growth in the two major
sources of fish production in Nigeria. One of the most credible reasons or a plausible explanation
for the upsurge in fish production therein could be the increasing demand verily conditioned by the
increase in population.
To further elaborate and substantiate the relationship between fishery sub-sector output and time, a
graphical representation of the linear trend of fishery sub-sector output in Nigeria is presented in
Figure 1. The result indicates a conspicuous gap between artisanal production and aquaculture
output in Nigeria. In the early 1960s, the country’s domestic source of fish was mainly attached to
captured fish, and aquaculture was under-developed but was gradually becoming an emerging
source of fish production. However, artisanal fish production continued to dominate larger part of
domestic production until early 2000.
Figure 1: Trends in output of captured fish, aquaculture and total fish output in Nigeria
(1961-2017)
It is quite interesting to note that from the 1960s to early 2000, the fishery sub-sector witnessed a
marginal growth in production, but due to the country’s civil war, a sharp break incurred to slow
down the pace of progress from 1968 to 1970. After the civil war, the country once again recorded
a steady growth in the production of artisanal fish till 1993, which was the year to mark the end of
the structural adjustment program (SAP) in Nigeria. Over the years, since then there have been
peaks and troughs in the trends of fish production, most likely due to some unchecked issues like
0
200000
400000
600000
800000
1e+006
1.2e+006
1960 1970 1980 1990 2000 2010
Outp
uts
in t
ons
Year
Figure 1: Trends in output of captured fish; aquaculture and total fish output in Nigeria (1961 - 2017)
TotalFisheryProdMetrictons
CapturefishProdMetrictons
AquacultureProdMetrictons
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
223
importation, smuggling, etc. But unexpectedly, there has been exponential growth in both artisanal
and aquaculture production in the country, from 1995 onwards till 2017, This growing trend could
perhaps be attributed partly to various incentives made available to stakeholders in the sub-sector
and partly due to the establishment of adequate and formal institutions by the Nigerian government,
to expand the frontier of research activities in various aspects of the fishery sub-sector. Moreover,
collaborations in the form of public-private partnership with established agencies/companies
involved in fish production also created a progressive atmosphere in the fishery sub-sector. For
instance, Akwa Ibom State government on several occasions distributed fishing gears and engine
boats to fish cooperative societies within the state (AKSG, 2008).
In addition, planned trade policies and tariff systems were gradually proposed for implementation
in recent years, led to the reduction of importation of fish into the country. Although the security
had been intensified at the borders so as to cope with excessive smuggling attempts, but in vain.
From the trending conditions, it is also apparently observed that production gaps between
aquaculture production and artisanal fish product increased persistently along the years.
Moreover, the issues leading to aquaculture production, which had been playing a sluggish role in
domestic fish production/supply, had to be dealt with sincere and important plans with various
effective determinants like, input prices, economic environment, and demand preferences, among
other factors.
Osawe (2007) reported that constraints in investment in aquaculture production in Nigeria emerge
in different facets and dimensions, and specifically pointed out the following major obstacles faced
in aquaculture development in the country: (i) scarcity of fingerlings, high costs of fish feeds and
labor force supply; (ii) poor water supply, land fragmentation for fish ponds development; (iii)
insufficient capital availability and lack of up-to-date technology in fish production, and obsolete
storage facilities; (iv) poor roads infrastructure and miserable conditions, leading to higher hike in
transport costs; and, (v) stormy and surging morbidity and mortality rates.
The poor National Fisheries Development plans and policies of the country in past few years
mainly focused on the development of industrial fisheries to the detriment and risk of aquaculture
production (Tobor, 1997). Likewise, many other researchers have also attempted to trace down the
causes of low productivity in aquaculture to be closely linked with several factors, including (i)
inadequate quality of fish seeds for stocking ponds, (ii) dearth of information on and usage of
modern technologies in aquaculture, due to poor extension in services, (iii) poorly trained
personnel, pathetic social capital formation, negligible support infrastructures, and (iv) capital
injection by the government and high costs of fish feeds (Tobor, 1997; Ugwumba, 2005; Adeogun
et al., 2007; Ugwumba and Nnabuife, 2008).
3.3. Unit root test for specified economic variables
In a bit to investigate the impact of major economic variables on fish production in Nigeria, the
stationarity test for the specified economic variables was conducted. This is necessary to avoid the
tendency of having nonsense regression estimates. The Augmented Dickey-Fuller root unit test and
Phillip Peron root unit tests were used to ascertain the degree of stationarity of specified variables
used in the analysis. The result of the Augmented Dickey-Fuller unit root tests are presented in
Table 4, while Phillip Peron unit root test is shown in Table 5. Unit roots equations specified were
those without constant and trend and those containing constant and trend. Variables were tested at
level and first difference and their order of integration determined. Critical values were set at 1%,
5%, and 10% probability levels. Result of ADF and Phillip Peron unit-roots show that for equation
without constant and trend, all specified variables were integrated of order 1. Also, inflation and
credit were stationary at a level for an equation containing a constant and trend for ADF and
inflation alone for Phillip Peron unit root test equation.
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
224
Table 4: Presentation of the result of the augmented Dickey-Fuller root unit test
ADF equation without Constant& trend ADF equation with constant and Trend
Variable Level 1st Diff. OT Level 1st Diff. OT
ARS 2.620 -6.635*** 1(1) -2.866 -7.791*** 1(1)
AQC 2.382 -2.029** 1(1) -1.386 -3.411* 1(1)
TFS 2.946 -3.061*** 1(1) -2.792 -7.403*** 1(1)
EXC 1.505 -5.127*** 1(1) -2.038 -5.897*** 1(1)
INF 0.029 -8.547*** 1(1) -4.332*** ─ 1(0)
CRE 0.428 -5.962*** 1(1) -3.227* ─ 1(0)
GDI 6.285 -4.440*** 1(1) -2.457 -6.307*** 1(1)
FIM 4.430 -1.630* 1(1) -2.017 -3.799** 1(1)
CRITICAL VALUES
CR (1%) -2.609 -2.607 -4.133 -4.133
CR (5%) -1.947 -1.947 -3.493 -3.493
CR (10%) -1.613 -1.613 -3.175 -3.175
Note: OT stands for order of integration. *, ** and *** represents 10%, 5% and 1% level of significance
respectively. Variables are as defined in Equations 6
Table 5: Result of Phillips – Peron root unit test
Variable Equation without Constant and trend Equation with constant and Trend
Level 1st Diff. OT Level 1st Diff. OT
ARS 2.962 -6.683*** 1(1) -3.055 -7.791*** 1(1)
AQC 4.950 -9.325*** 1(1) -1.923 -12.286*** 1(1)
TFS 3.369 -6.312*** 1(1) -2.793 -7.404*** 1(1)
EXC 1.596 -5.209*** 1(1) -2.009 -5.909*** 1(1)
INF -0.858 -14.038*** 1(1) -4.255*** ─ 1(0)
CRE 0.732 -8.367*** 1(1) -3.089 -11.145*** 1(1)
GDI 5.824 -4.002*** 1(1) -2.493 -6.275*** 1(1)
FIM 4.119 -4.927*** 1(1) -2.164 -6.215*** 1(1)
CRITICAL VALUES
CR (1%) -2.607 -2.607 -4.130 -4.133
CR (5%) -1.946 -1.946 -3.492 -3.493
CR (10%) -1.613 -1.613 -3.174 -3.175
Note: *, ** and *** represents 10%, 5% and 1% level of significance respectively. Variables are as defined in
Equations 6
Results, as presented, imply that the time series specified are non-stationary at their level. This
suggests the verification of the co-integration among the specified variables as proposed by
Johansen (1988) and Johansen and Juselius (1990).
3.4. Johansen’s co-integration test on specified variables
The co-integration test as was developed by Granger (1981) involved the determination of long-run
associations among non-stationary time-dependent variables. The prerequisite for conducting the
test is that the series must be integrated of the same order or non-stationary individually. The study
applied the Engle and Granger two-step technique and Johansen approach to conduct the co-
integration test on the specified series. Results showed stationary of residual (ECM) generated from
the long-run model representing the captured fish output, artisanal and the entire fishery sub-sector
outputs. The results are presented in the lower portion of Table 7. The test results showed that at
1% level of probability, the Engle-Granger co-integration tests reject the null hypothesis of no co-
integration. This implies that there are long-run equilibrium relationships between fishery sub-
sector outputs and major macroeconomic variables in Nigeria. In the same Venn, the Johansen co-
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
225
integration approach showed that the trace and maximum Eigen value test statistics were significant
at various rank levels. The result is presented in Table 6. The result further indicates at least two (2)
co-integration relationships among specified series.
The upper region of Table 7 presents the estimated long run models for outputs of capture fish,
aquaculture and the entire sub-sector. The long run coefficients represent the long-run fishery
output elasticity with respect to each of the specified macroeconomic series.
Table 6: Johansen’s co-integration test results
Hypothesized
No. of CE(s)
Eigen
Value
Trace
Statistic
Critical Value Max-Eigen
Statistic
Critical Value
99% 95% 99% 95%
None * 0.723 153.636*** 104.962 95.754 70.669*** 45.869 40.077
At most 1 * 0.508 82.967*** 77.819 69.819 38.995** 39.370 33.877
At most 2 0.309 43.972 54.682 47.856 20.351 32.715 27.584
At most 3 0.215 23.621 35.458 29.797 13.307 25.861 21.132
At most 4 0.166 10.314 19.937 15.495 10.005 18.520 14.265
At most 5 0.006 0.309 6.635 3.841 0.309 6.635 3.842
Note: Trace test indicates 2 co-integrating equations at the 0.01 level.* denotes rejection of the hypothesis at
5% and 1% level. Max-Eigen value test indicates 1 co-integrating Eqn.(s) at the 0.01 level and 2 equations at
5% level
3.5. Error correction model for Fishery development in Nigeria
The error correction model (ECM) for the co-integrating series in the study was estimated and is
presented in Table 8. The main motive for estimating the ECM model was to capture the dynamics
in the fishery development equation in the short-run and to determine the speed of adjustment as a
response to the departure of the long-run equilibrium. For the purpose of achieving a parsimonious
dynamic ECM for the fishery sub-sectors’ equations; the study used Hendry’s (1995) approach.
“This approach estimated an over parameterized model initially and was gradually reduced by
eliminating insignificant lagged variables until a more interpretable and parsimonious model was
obtained” The slope coefficient of the error correction term in each specified equation (i.e. outputs
of capture fish, artisanal fish and entire fishery sub-sector) showed the prerequisite negative sign
and was statistically significant at the conventional probability level. The result obtained from the
sign of the coefficient of ECM validates the existence of a long-run equilibrium relationship among
the series specified in the study, and also indicates that the fishery sub-sector development is
sensitive to departure from its equilibrium value in the previous periods. In other words; the
estimated equations will be at an appropriate time correct any deviations from the long-run
equilibrium. If long-run equilibrium value is too high; the error correction will reduce it, otherwise
it will increase it.
The slope coefficient of the error correction term representing the output of captured fish is 0.221.
This denotes that, about 22.10% of any past deviations from the long run disequilibrium are
corrected in the current period. Thus, it will take more than four (4) years for any disequilibrium, in
the long-run, to be totally corrected. The long-run disequilibrium adjustment periods for
aquaculture and the entire fishery sub-sector are similar to the captured fish output and will equally
require more than four years for a total adjustment.
The validity test for the ECM model revealed R-squared values of 0.226, 0.299 and 0.248 for
captured fish, aquaculture and entire fishery sub sector equations respectively. This implies that at
22.6%, 29.9% and 24.8% of the total variations in captured fish, aquaculture and entire fishery sub
sector’s output respectively are explained by the specified macroeconomic series in the equation.
The F-test for each of the fish sources is significant at the conventional level of probability
showing that the estimated coefficients of determination are statistically significant. The normality
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
226
tests for each of the fish source are significant implying, the residuals are normally distributed and
this also justify the used of ordinary least squared method of estimation.
Table 7: The Long-run determinants of development in fishery sub-sector in Nigeria
Variable Captured fish Aquaculture Entire Fishery
Constant 9.534 (6.988)*** 11.296 (5.201)*** 10.438 (8.214)***
GDIt 0.336 (3.170)*** 1.082 (6.411)*** 0.473 (4.792)***
CREt 0.103 (1.080) 0.010 (3.067)*** 0.077 (0.868)
INFt ─0.043 (-1.201) ─0.141 (-2.503)** ─0.0127 (-0.385)
FIMt ─0.013 (-2.449)** ─0.404 (-2.805)*** ─0.058 (-3.684)***
EXCt ─0.223 (-4.480)*** ─0.150 (-1.898)* ─0.251 (-5.418)***
R- Squared 0.894 0.951 0.926
F(5, 51) 86.179*** 196.033*** 127.869***
Unit Root of Residual (equation without trend and constant)
ADF test -3.516*** -3.998*** -3.517***
Phillip-Perron test -3.486*** -4.031*** -3.472***
Unit Root of Residual (equation containing trend and constant)
ADF test -3.402* -3.911** -3.434*
Phillip-Peron test -4.093** -3.947** -4.093**
Note: *, ** and *** represents 10%, 5% and 1% level of significance respectively. t-values are in parentheses
The RESET test of the structural rigidity of the estimated equation is significant for the three
sources of fish output. This means that the estimated equations have structural rigidity and are
stable. The value of the Durbin-Watson test for the three sources of fish output indicates the
presence of minor serial correlation. However, “the ECM model has been shown to be robust
against residual autocorrelation; hence, the presence of autocorrelation does not affect the
estimates” (Laurenceson and Chai, 2003).
3.6. Long and short runs determinants of fishery development in Nigeria
The long and the short runs impact of macroeconomic variables on output of fishery sub-sector was
discussed based on sources of fish as specified in the study. The detail discussion is found below.
3.7. The long and short runs impact of macroeconomic variables on captured fish output
The short-run model reveals that per capita GDP which proxy the purchasing capacity of Nigeria
has a significant positive relationship with the captured fish output in Nigeria. The result is also
replicated in the long-run period. This implies that, as demand capacity upsurge, the captured fish
output increases too in both short and long-run periods. For instance, a 10% increase in the
purchasing power of consumers would lead to 2.60% and 3.36% increase in captured fish output in
the short and long-run period respectively. Hence any policy that increases the per capita GDP will
have a direct impact on captured fish production in Nigeria in both short and long runs. The reason
for the result could be attributed to the fact that; captured fish comes in different sizes and quality
and are readily affordable to the wide range of consumers. Another possible reason is the necessity
of fish protein in the dietary requirement of most Nigerian. Captured fish constitutes one of the
affordable sources of animal protein available to the majority of consumers in Nigeria. Being one
of the major sources of animal protein hence normal good, its consumption increases with an
increase in consumers’ income.
The slope coefficient of the nominal exchange rate in short and long run models is negative and
significant at the conventional probability level. This implies that as the exchange rate increases
(i.e. naira depreciates against the US dollar), the output of captured fish responded negatively and
vice versa. However, the magnitude of this response was greater in the long-run compared to the
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
227
short-run period. For example, a 10% increase in the nominal exchange rate will lead to 0.75% and
2.23% decrease in the output of captured fish in the short and long run periods respectively. The
reason for this result could be seen in two dimensions. Firstly, the increase in the exchange rate
would make the importation of fishing inputs and processing facilities difficult and would be very
expensive for the resource-poor fisher folks in the country. As a result of this, the efficiency of
these fisher folks will reduce and the overall production/catch shrinks. Secondly, the increase in the
exchange rate has encouraged many fisher folks to sell off their production in the high sea thereby
reducing domestic supply.
In the long run, food import has a negative impact on captured fish output. The result satisfies a
priori expectation because the increase in food import would result in dumping and this will shrink
domestic production. A 10% increase in imports will lead to a 0.13% reduction in the volume of
captured fish in the country. Hence, any government policy that discourages massive food import is
directly increasing the efficiency of capture fish production in the country.
3.8. The long and short runs impact of macroeconomic variables on aquaculture fish output
The slope coefficient of per capita GDP in both short and long models is significant and positively
related to aquaculture output in Nigeria. This means that, as the purchasing power of consumers
increases, the aquaculture output increases correspondingly. For example, a 10% increase in the
purchasing power of consumers will lead to 2.58% and 10.82% increase in aquaculture output in
the short and long-run periods respectively. Based on the magnitude of the elasticity coefficient, it
seems purchasing power is the most important macroeconomic factor influencing aquaculture
production in Nigeria. The result is in line with the expectation of the study because aquaculture is
basically business-oriented and needs financing for sustainability.
Food import has a negative relationship with the output of aquaculture in short and long-run periods
in Nigeria. This means that, as the volume of food imports increases, the tendency to increase
aquaculture production deteriorates. For instance, a unit increase in food imports would result in
0.002 and 0.013 units declined in aquaculture production in the short and long-run period
respectively. As expected, an increase in food import will create unhealthy competition resulting to
suppress domestic production.
Similarly, the nominal exchange rate (naira for dollar) relates negatively to the output of
aquaculture in short and long-run eras in Nigeria. This suggests that a 10% increase in the nominal
exchange rate will reduce aquaculture output by 1.05% and 1.50% in short and long run periods
respectively. An increase in the nominal exchange rate of naira for dollar will directly constrain the
importation of farm inputs or machinery and will stimulate locally produced substandard input.
Since key input used in aquaculture is imported, an increase in the nominal exchange rate will
breed inefficiency in production through high morbidity and mortality rates in production, thereby
reducing aggregate output.
The long run coefficient of credit to the economy reveals a significant and direct relationship with
aquaculture output in Nigeria. A 10% increase in credit disbursement to the economy will trigger a
1.0% increase in aquaculture output in the long-run. Credit has become a serious concern to
agricultural development in Nigeria. The impact of credit disbursement on aquaculture output
satisfies the a priori expectation. This because the federal government over the years has
implemented several credit policies anchored by collaborative institutions such as commercial
banks, micro finance Banks and the central bank of Nigeria as well as special arrangement with the
State government to release credit to the agricultural sector in the country. The resultant effect has
become a massive injection of credit to the sector at the regulated interest rate and the
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
228
corresponding increase in agricultural output. However, the impact of credit on aquaculture output
was not significant in the short-run periods.
Table 8: The Short-run economic determinants of development in fishery sub-sector in
Nigeria
Variable Captured fish Aquaculture Entire Fishery
Constant 0.007 (0.321) 0.101 (1.813)* 0.014 (0.536)
∆Lag-1 (dependent V.), 0.095 (0.465) -0.239 (-1.667)* 0.119 (0.867)
∆GDIt 0.260 (2.210)** 0.258 (2.979)*** 0.262 (2.328)**
∆CREt 0.127 (1.504) 0.111 (0.529) 0.092 (1.090)
∆INFt ─0.001 (-0.054) ─0.039 (-0.974) ─0.002 (-0.130)
∆FIMt ─0.002 (-0.048) ─0.122 (-0.977) ─0.015 (-2.306)**
∆EXCt ─0.075 (-2.296)** ─0.105 (-1.783)* ─0.084 (-1.871)*
ECMt-1 ─0.221 (-4.256)*** ─0.249 (-2.091)** ─0.228(-3.066)***
R- Squared 0.226 0.299 0.247
F(5, 51) 5.194*** 2.871** 2.209**
Normality test (Chi-sq.) 27.67*** 49.377*** 30.485***
RESET Test (F(2, 45)) 16.616*** 22.217*** 12.689***
CUSUM test (Harvey-C) -2.739*** 2.682*** -2.454 **
Durbin Watson test 1.929 2.150 1.969
Note: *, ** and *** represents 10%, 5% and 1% level of significance respectively. t-values are in parentheses
The long run coefficient of inflation indicates a significant negative relationship with aquaculture
development. For instance, a 10% increase in the inflation rate will induce a 1.41% reduction in
aquaculture production. A rise in the inflation rate will inflate the prices of factors of production
and also lower the purchasing power of consumers. Since aquaculture is business-oriented, a rise in
inflation will reduce the efficiency of production and brings about higher production uncertainties
as well as risks. To cushion the effect of inflation in the long-run, output will decline accordingly.
However, the relationship was statistically insignificant in the short-run period.
3.9. Impact of macroeconomic variables in the long- and short-run periods
Throughout the entire discussion on fishery sub-sector in Nigeria, the findings have very clearly
shown that in the long run, fish output had been affected by the purchasing power of the consumers,
volume of food imports, and fluctuation in the nominal exchange rate of ‘naira’ as against the US$.
In the short run, on the other hand, our study identified previous outputs in the sub-sector,
purchasing power of consumers, food import and nominal exchange rate as the major determinants
of fishery output in Nigeria. Based on the magnitude of the estimated coefficient, it is also shown
that the purchasing power of consumers is the most important factor that affects the output of the
fishery sub-sector in the short-run and, as well as in the long run periods in Nigeria. Since the
processing and storage system are both expensive and out of the reach of poorly resourced fisher
folks, the effective demand is considered to be the most necessarily essential aspect for the survival
of fish production.
4. CONCLUSION AND RECOMMENDATIONS
The outcome of the study has precisely revealed empirical relationship between the output of the
fishery sub-sector and some macroeconomic variables in both the short-run and long-run periods in
Nigeria. The exponential growth rate in various sources of fish production in the subsector revealed
quite positive growth within the period considered for the study, i.e. from 1961 and 2017.
Surprisingly, the artisanal or captured fish production contributed more than 80% of the total fish
production of the country. The empirical results of our study have also revealed the significant role
of per capita income, credit, inflation, food import and exchange rate on fish production in Nigeria.
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
229
Following the current requirements and necessary promises of the federal government to provide
nutritious and sufficient food to its citizens, it is absolutely and needful required mapping out the
ways to intensify fish production in the country. The evidence derived from the results of our study,
supports well the following recommendations:
a) The growth rate in the sub-sector is positive; and premised on this, the study strongly supports
the current policies, programs, and institutions established in Nigeria to fast track the fish
production in the country. But call for greater efficiency in the management of the sector’s
resources, which is still on the slower tracks.
b) The federal government should try to reduce its fish import and rather generate appropriate
policies that would upsurge domestic production of fish.
c) Depreciation of ‘naira’ has always shown a deteriorating effect on fish production in the
country. The study strongly upholds the task of the federal government of Nigeria in regulating
her economic system to ensure stability of its currency exchange against US$.
d) Just as a way to encourage aquaculture production, more credit channels should be opened for
fish farmers in the country. A credit system that guaranteed minimum risk and built on a
single-digit interest rate is strongly advocated.
e) Finally, the implementation of economic policies void of inflationary tendencies, is being
strongly advocated through the results of this study.
Funding: This research was sponsored totally by the contributions of authors.
Competing Interests: Authors declared that they have no conflicting interests. Contributors/Acknowledgement: All authors participated equally in all stages involved in this research.
Views and opinions expressed in this study are the views and opinions of the authors, Asian Journal of
Agriculture and Rural Development shall not be responsible or answerable for any loss, damage or liability
etc. caused in relation to/arising out of the use of the content.
References
Akpan, S. B., Edet, U. J., & Umoren, A. A. (2012). Modeling the dynamic relationship between
food crop output volatility and its determinants in Nigeria. Journal of Agricultural Science,
4(8), 36-47. doi.org/10.5539/jas.v4n8p36
Akpan, S. B. (2012). Analysis of food crop output volatility in agricultural policy programme
regimes in Nigeria. Developing Country Studies, 2(1), 28-35.
Adekoya, B. B., & Miller, J. W. (2004). Fish cage culture potential in Nigeria-An overview.
National Cultures. Agriculture Focus, 1(5), 10.
Adeogun, O. A., Ogunbadejo, H. K., Ayinla, O. A., Oresegun, A., Oguntade, O. R., Alhaji, T., &
William, S. B. (2007). Urban aquaculture: producer perceptions and practice in Lagos state,
Nigeria. Middle-East Journal of Scientific Research, 2(1), 21-27.
Adewumi, A. A. (2015). Aquaculture in Nigeria: sustainability issues and challenges. Direct Res. J.
Agric. Food. Sci., 3(12), 223-231.
Enabulele, H. N. (1999). PowerPoint seminar presentation: impact assessment of the agriculture
development projects (ADPs) on fish farming in Nigeria. Department of Agribusiness and
Consumer Science, College of Food Systems, United Arab Emirate University.
FAO (2018). Nutritional benefit of fish.www.fao.org/docip//68. Retrieved, 12.10.2018.
Fasanya, I. O., Onakoya, A. B. O., & Agboluaje, M. A. (2013). Does monetary policy influence
economic growth in Nigeria? Asian Economic and Financial Review, 3(5), 635-646.
Federal Department of Fishery, Ministry of Agriculture and Water Resources (FMAWR) (2018).
National food security programme. Federal Government of Nigeria, Abuja.
Fischer, S. (1993). The role of macroeconomic factors in growth. Journal of Monetary Economics,
32(3), 485-512.
Granger, C. W. J. (1981). Some properties of time series data and their use in econometric model
specification. Journal of Econometrics, 16, 121-130.
Asian Journal of Agriculture and Rural Development, 9(2)2019: 216-230
230
Grema, H. A., Geidam, Y. A., & Egwu, G. O. (2011). Fish production in Nigeria: an update.
Nigerian Veterinary Journal, 32(3), 226-229.
Hendry, D. F. (1995). Dynamic econometrics. Oxford: Oxford University Press.
Issa, F. O., Abudulazeez, M. O., Kezi, D. M., Bare, J. S., & Umar, R. (2014). Profitability analysis
of small scale catfish farming in Kaduna State, Nigeria. Journal of Agricultural Extension
and Rural Development, 6(8), 267-273. doi.org/10.5897/jaerd2013.0570.
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics
and Control, 12, 231-254.
Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on
cointegration–with applications to the demand for money. Oxford Bulletin of Economics and
Statistics, 52(2), 169-210. doi.org/10.1111/j.1468-0084.1990.mp52002003.x
Laurenceson, J., & Chai, J. C. H. (2003). Financial reform and economic development in China.
Edward Elgar, Cheltenham.
Lachaal, L. (1994). Subsidies, endogenous technical efficiency and the measurement of production
growth. Journal of Agriculture and Applied Economics, 26(1), 299-310.
doi.org/10.1017/s1074070800019386.
Muftaudeen, O. O., & Hussainatu, A. (2014). Macroeconomic policy and agricultural output in
Nigeria; implications for food security. American Journal of Economics, 4(2), 99-113. Doi:
10.5923/j.economics.20140402.02.
Moyle, P. B. (1990). Department of wildlife and fisheries biology university of California -Davis.
American Fisheries Society, 20, 633.
Osawe, M. (2007). Technical Know-how of catfish grow out for table size in 4-6 months. Proc.
Seminar on Modern Fish Farming by Dynamo Catfish Production. Lagos, Nigeria. pp. 1-14.
Paulina, O. A., & Hammed, A. K. (2018). Comparative evaluation of the nutritional, physical and
sensory properties of beef, chicken and soy burgers. Agriculture and Food Sciences
Research, 5(2), 57-63.
Payne, I. (2000). The changing role of fisheries in development policy. ODI-Natural Resources
Perspectives No. 59.
Romer, P. M. (1994). The origin of endogenous growth. The journal of economic perspectives,
8(1), 3-22
Tobor, J. G. (1997). The fish industry in Nigeria: status and potential for self-sufficiency in fish
production. Nigeria Institute of Maritime NIOMR Technical Paper, 54, 34.
Ugwumba, C. O. A. (2005). The economics of homestead concrete fish pond in Anambra state,
Nigeria. African Journal of Fisheries and Aquaculture, 4, 28-32.
Ugwumba, C. O. A., & Nnabuife, E. L. C. (2008). Comparative study on the utilization of
commercial feed and home-made feed-in catfish production for sustainable aquaculture.
Multidisciplinary Journal of Research Development, 10(6), 164-169.